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HomeMy WebLinkAbout- NB-1 - BIA Reauthorization for FY2011-12 - 5/15/2012r I / MEETING DATE: MAY 15, 2012 ITEM NUMBER: NB -11 SUBJECT: BUSINESS IMPROVEMENT AREA (BIA) REAUTHORIZTION DATE: MAY 8, 2012 FROM: OFFICE OF THE CEO PRESENTATION BY: DAN JOYCE, PUBLIC AFFAIRS MANAGER FOR FURTHER INFORMATION CONTACT: DAN JOYCE (714) 754-5667 d a n.Joyce(a)costamesaca.gov RECOMMENDATION: Staff recommends that the City Council: 1. Approve and file the annual reports for the Business Improvement Area (BIA) for Fiscal Year 2011-2012 (see attachment 1 and attachment 2), and 2. Adopt a Resolution of Intention (see attachment 2) including: reauthorization of the BIA Assessment District boundaries; approval of the BIA budget; and the setting of a Public Hearing for June 5, 2012. BACKGROUND: In 1995, the City Council adopted Ordinance No. 95-9 to establish a Business Improvement Area (BIA) for the purpose of assisting the Hotel and Motel Industry in their promotion of tourism within the City. The BIA imposed a one percent (1%) assessment on the sale of hotel and motel overnight guest room stays. This money was to be used for the establishment and maintenance of a local tourism and promotion council. The Costa Mesa City Council authorized the City Manager to contract with the Costa Mesa Tourism and Promotion Council to develop and administer the BIA. The Council later became the Costa Mesa Conference and Visitor Bureau (CMCVB). The Bureau's Board of Directors is comprised of the ten (10) general managers of the participating hotels, a member of the City Council and the CEO of the City of Costa Mesa or his designee. In January of 2000, the participating hotels requested, and the City Council approved an increase in the assessment from one percent (I%) to two percent (2%). In October 2010, the participating hotels requested Council to increase the assessment from two percent (2%) to three percent (3%). This increase was approved and became effective on January 1, 2011. 1 ANALYSIS: The authority to develop a Business Improvement Area is detailed in the Streets and Highways Code, Section 36500. This State law enables Costa Mesa to impose an assessment fee on businesses within an area designated by the City. All of Costa Mesa has been designated as the BIA benefit zone. Currently the number of properties included in the BIA assessment levy is limited to the ten hotels that have expressed an interest in participating in the program as detailed in the attached Resolution of Intention (see Attachment 3). As a function of the renewal process, all ten affected property owners will be legally noticed of the assessment renewal and provided an opportunity to "protest" the annual assessment through the public hearing process. Staff will also notice all the hotels and motels in the City not currently included in the BIA to allow them the opportunity to be included in the BIA. The notice will indicate that hotels/motels wishing to be included may attend the Public Hearing on June 5, 2012 to address that issue. The City Council makes the ultimate decision as to the size of, and the properties to be included in the BIA. Once the annual assessment is approved, the assessment is then collected along with the City's Transient Occupancy Tax (TOT). The hotels/motels included in the BIA are required to itemize the BIA levy as a separate assessment. The Bureau Board and CVB staff manages the day to day activities. In addition, the Bureau has prepared the attached Annual Report, as required by Section 36533 of the Streets and Highways Code. The Annual Report summarizes the Bureau's activities and accomplishments over the past year. (See Attachment 1). The Annual Report also details the projected budget for the coming fiscal year. The City Council may approve the report or modify any particular item(s), and approve as amended. Lastly, Geller, Eperthener and McConnell, LLP., has completed the annual audit of the Bureau for the fiscal year ending on June 30, 2011, as required by the Professional Services Contract in effect between the City and the Costa Mesa Conference and Visitor Bureau. The existing agreement with the Bureau provides for the preparation of an annual audit paid for from the BIA assessment. The audit is intended to insure that the assessment revenue is expended for public purposes as specified within the resolution and that no expenditures are made in a manner contrary to the agreement. The audit is included in the Annual Report. Highlights of the 2011 — 2012 Fiscal Year The Tourism Economics California Travel and Tourism Outlook 2012 states visitor growth for California is expected to rebound and surpass pre -recession results. For 2011, revenue per available room (REVPAR) in the state of California was up 11 % in 2011 compared to 2010. Our Costa Mesa hotels (9 of the 10 who report to Smith Travel Research) experienced an increase of +9.2% in REVPAR for the calendar year of 2011. Average room rate grew +3.5% and occupancy grew +5.5%. The CVB accomplished many goals in the 2011-2012 fiscal year including expanding the relationship with the City and developing continue relationships that promotes Costa K Mesa as a destination location. A new website was launched, an new promotional video capturing the "City of the Arts", creation of the first ever Restaurant Week with over 28 hotels and more than 28,000 consumers, developing weekend packages that increased weekend occupancy and sponsoring grass roots events that increased overnight travelers. The OC Marathon is a great example. Hotel rooms were up 126% in 2012 verses 2011. Marketing expenses the year ending June 30, 2012 will be $640,000 up from $319,848 from 2011. In 2012-2013, the Bureau will continue their focus to online marketing, social marketing and email marketing campaigns which will be more cost effective. Estimated marketing expense for 2012-2013 fiscal year is estimated at $1,045,719. In 2011, the City of Costa Mesa and the Bureau have formed a "Strategic Alliance" for the upcoming year. The Bureau increased their financial support to $164,000 to provide funding for activities which are mutually beneficial to both organizations and to provide marketing support to assist with branding the City. Those funds were used to sponsor 6 community events, the Sister City Program, website redesign and promotional items. The Bureau has verbally committed to allocate similar funds for the 2012-2013 budget. City staff is working with the CVB on securing more special events that will increase room nights for out-of-town guests seeking hotel accommodations. This joint effort has already secured the Costa Mesa Classic Soccer Tournament for December 2012. The tournament will consist of sixteen high school soccer teams with the majority of teams coming from Northern California and out of state. The tournament is estimated to generate 75 additional room nights. ALTERNATIVES CONSIDERED: Do not adopt the Resolution of Intention. FISCAL REVIEW: The recently completed audit shows the Bureau's cash equity as of June 30, 2011 to be $985,314. According to the 2011/12 Annual Report, the CMCVB has a total of $1,596.54 in BIA actual revenues through April and is estimating to generate an additional $300,000 for the months of May and June for an estimated fiscal year total of $1.8 million. The CMCVB has also estimated that their expenditures for the 2011-2012 fiscal year will be approximately $1.5 million, leaving approximately $300,000 in unexpended funds available for 2012-2013. Total projected revenue and expenditures for 2012-2013 is $1,964,301. The City receives one percent (1%) of the BIA revenue/assessment as partial reimbursement for its collection and administrative costs. The one percent (1%) allocated to the City for reimbursement is estimated at $19,643 for the 2012-2013 fiscal year. This fee will sufficiently cover the costs incurred by the City in assisting the Bureau. Examples of CMCVB expenditures include: an advertising campaign; media relations, brochures/promotional items; video production, administration; special promotions; and hotel niche marketing. 3 LEGAL REVIEW: The City Attorney's Office has prepared the attached Resolution of Intention pursuant to the Parking and Business Improvement Area Law of 1989. No further legal review is required at this time. CONCLUSION: This is the initial step in the re -authorization of the BIA assessment. As with other assessment districts, State law sets up a specific procedure to be followed in the establishment of such an area. Staff will be making a presentation to the City Council on the implementation of the BIA assessment at the Public Hearing on June 05, 2012. QO&A� DANJOYCE Public Affairs anager —I 4-�_U� BO BY YO f Finance & I.T. i ctor (fiscal review only) . DISTRIBUTION: CMCVB Chamber of Commerce Finance -RICK FRANCIS Assistant Chief Executive Officer THOMAS P. DUARTE City Attorney (legal review only) ATTACHMENTS: 1 2011-2012 Annual Report 2 CMCVB Audit Fiscal Year Ending 6/2011 3 Resolution of Intent 12= File Name Date Time 19 ATTACHMENT 1 s economic viability, Vision Statement The Costa Mesa Conference and Visitor Bureau is the engaged destination marketing leader, supporting and selling the city's distinct visitor brand experiences and advocating community tourism benefits. [, The goal of the Bureau is to market Costa Mesa's location and amenitle`s, #klr o7 City l lg fNakzfE tool fYi tl s na ioYt strides we have made in the past year, we will continue to market The Clty of theArts m ith t t sir AgYl5;5 ,f££SfT retafl offerings, Segerstrom Center for the Arts, culinary diversity and OC location. The Bureau will contlnue fo draw new visitors to our hoteliers during need times, the Barrett-Jackson Car Collector Auction In June, OC Marathon in May and Costa Mesa Restaurant Week in August. The Bureau looks forward to marketing these events and branding ourselves as The City of the Arts 'With Myriad Marketing Inc. as we head into our new fiscal year. Our hotels continue to enhance their products Including room renovations at the Hilton and the Ramada and a lobby and restaurant reinvention at the Wyndham. The Ayres Hotel and Suites refreshed their main pool area with lush landscaping and luxury cabanas. California continues to draw millions of visitors to our beautiful state both domestically and internationally. Visit California forecasts total visits to grow by+6%in zotz. The Tourism Economics California Travel and Tourism Outlook 2012 states visitor growth for California Is expected to rebound and surpass pre -recession results. For zott, revenue per available room (REVPAR) in the state of California was up n %in zon compared to zoto. Our Costa Mesa hotels (9 of the to who report to Smith Travel Research) experienced an Increase of +9.2% in REVPAR for the calendar year of 2011. Average room rate grew +3.5%and occupancy grew +5.5%. For the Bureau, It was a year to rebuild, and define what makes our city great. The talented and driven staff will ensure the success of future years to come. Costa Mesa is an exciting overnight destination and we look forward to creating a recognizable, dynamic brand- The City of theArts.'TM Sincerely, Paulette Lombardi -Fries President, Costa Mesa Conference and Visitor Bureau 7 Every 1% increase in visitor spending = 8,73o new Travel spending generated $2.3 billion in local taxes and $4 billion in state taxes Travel spending generated 523,000 jobs in the state State Impact of Tourism EM Spending (Bill Ion) "v—Employment 00 Ol 01 Ol O1 Ol 01 O1 Ol O O O O O O P O O O H N Ot Ol 01 Ol Qt O1 Ol Ql O O b O O O O O O O O N 4 1,000 950 900 850 800 750 700 650 600 550 500 Occupancy +5.3% Domestic Air Traffic +1.9% I Sources: DK Shifflet & Assoc.; TNS TravelsAmerica /D 221 MILLION TOTAL NONRESIDENT TRIPS $14.0 BILLION TOTAL NON-RESIDENT SPENDINO PRIMARY WESTERN MARKETS 13.3 MILLION ANNUAL TRIPS (499) $0 BILLION ANNUAL SPENDING (32%) LONGHAULUS 13.8 MILLION ANNUAL TRIPS (519,) 425 BILLION ANNUAL SPENDING (68%) 800,000 600,000 400,000 200,000 0 �aaa J� aQ�� w�a\\a r�°� o��aJ�e ���`� a`��oaJ`a \�a\a La PJe L �� Qec P� aha $200 $0 Sources: US Dept. of Commerce; CIC Research; Stats Canada; CTTC Leisure +1.5% Spend $88.3 Billion Total Visits +4.7% Canada +3.9% Spend $21.7 Billion 1A All of Costa Mesa 74.35% +1.6% YOY $112.13 +4.1% YOY Orange County YTD 67.49% +7.8% YOY 143.53% +4.2% YOY thru Feb. 2012 All of Costa Mesa YTD 70.37% no change thru Feb. 2012 )3 $114.57 -•5% YOY Hotel Hanford 3131 Bristol Street, Hanford Hotels Hanford Hotels Costa Mesa 4Corporate Drive 4 Corporate Drive Suite tot Suite 102 Newport Beach, CA 92660 Newport Beach, CA 92660 Costa Mesa Marriott Soo Anton Blvd., Marriott international Host Hotels & Resorts Costa Mesa 10400 Femwood Rd. 6903 Rockledge Dr. Bethesda, MD 20817 Suite 1500 Bethesda, MD 20817 Residence Inn by Marriott 881 Baker Street, Costa Mesa Wyndham Orange County 335o Avenue of the Arts, Costa Mesa Marriott International ING Clarion partners 10400 Fernw0od Rd. 2650 Cedar Springs Road Bethesda, MD 20817 Suite 85o Dallas, TX 75201-1491 Host Hotels &Resorts asegerstrom.&sons 690; Rockledge DG 90 South Coast Plaza Suite l5oo 686Antonelvd. Bethesda, MID 208q Costa Mesa, 0992626 Rosanna Inc. Rosanna Inc. 10 335o Avenue of the Arts, 3350 Avenue of the Arts, Costa Mesa Costa Mesa �y Mike Hall - Chairman of the Board, General Manager, The Westin Souttf ti tP# d "" Susan O'Brien Moore - Vice President, General Manager, Ayres Hotel & Suites Sue Cooke - Treasurer, General Manager, Residence Inn by Marriott Costa Mesa Newpo Open Position as of April 2012 - Secretary Directors Kandee Anderson, General Manager, Costa Mesa Marriott Phil Campanelli, General Manager, Hilton Orange County/Costa Mesa Naj Ekhlas, General Manager, Best Western Plus, Newport Mesa Inn Abdul EI-Makhgiange, General Manager, Ramada Inn and Suites Eric Grimm, General Manager, The Hotel Hanford Dan Joyce, Public Affairs Manager, City of Costa Mesa Peter Naghavi, Deputy CEO and Director of Economic Development, City of Costa Mesa Shetal Petal, General Manager and Owner, Holiday Inn Express Paul Sanford, General Manager, Wyndham Orange County Advisors Terry Dwyer, President, Segerstrom Center for the Arts Werner Escher, Executive Director of Domestic and International Markets Peter Papagelis, General Manager, Mastro's Steakhouse Revenues Actual 20111202 Projected 2o2/2013 July @156,288.05 $160,977.00 August $159,400.19 $164,182.00 September $216,789.70 $223,294.00 October $179.997-95 $185,397-00 November $152,119-46 $156,683.00 December $117,092.5 $12060.00 January 5168,52+.25 $173,577.00 February $147,246.48 $151,663.00 March $139,660.42 $143,850.00 April $158,938.44 $163,706.00 Ma •not received $16z,7go.0o June 'not received St57,6z7.00 TOTAL: $1,5 6'05i.89 .8 $1, bq, 01.00 Expense Projections Fiscal Year 2012/2013 Total Marketing Expense 51,045,71900 online Marketing/Display Ads/Email Familiarization Tours/Promotions/Print Advertising Sponsorships/CommunityMdeo Production Tradeshows/erochures Employee Expenses 1 $412,80300 Salaries/Payroll Taxes/Workers' Comp Employee Benefits (cost of service FSA, health Insurance for nese associate only, 401K 3% bureau contribution) Payroll Services/Incentives/Meetings & Conferences Hotel Marketln Fund1 $348,000.00 $150 per hotel room for the ten participating hotels Total Administrative Expenses $157,779.00 City Collection Accounting Audi MBeage)Bank Charges/Dues& Subscriptions/]murance/office Supplies/RenVParking/Postage/Telephone/Fravei TOTAL EXPENSES: 1 $1,264,301-00 Contingency Fund: $500,000.00 This fund is set aside for economic downturn, unforeseen emergencies or natural disasters. This reserve would enable the Burgau to operate and cover rent and payroll for 12 months while the Board of Directors reassess the budget and create contingency plans. /(a site that was modern, functional and user friendly. The site of the website is twofold. Its first goal is to be a lead generation tool for Its participant hotels. To this end, the site will continually provide special offers at Costa Mesa hotels during local events and promotional packages to encourage new visitors from feeder markets to visit Costa Mesa. In addition to being a valued source of offers for the potential hotel guest, the website's other goal is to engage the user and turn TravelCostaMesa.com into a source of trusted Information for the Orange County visitor. The Bureau continues to develop TravelCostaMesa.com Into a content leader forthe Orange County area. With the move to a new interactive marketing agency and new server, the build of the new site was a significant effort. The Bureau's web marketing contractor built a fully customized content management system (CMS) and built the site in PHP, an open -source scripting language that is especially suited for web development and can be embedded into HTML. It provides a large suite of customizable products and it also can be maintained easily by any web development company. A Word Press blog was added, along with a photo and video gallery. The Bureau owns the domain, all web assets and the CMS. in addition to the back -end build of the website, new content and photography was needed. The Bureau's marketing team wrote new content for the website and expanded its sections of interest, Including local attractions and recreation to the site. The Bureau also conducted a photo shoot of local areas of interest. 17 14 x,eapop..+aaw.an. _P vwtLW ._i+ W4. Ystm:YQHO P i+pwan:b&ON "T'Owrm N::tAEO% e 15 a60-Sf%x..w.xer • 1}09%xNenFOYFw aue um w i ssss a fe.a n i em Facebook: 1,850 likes tvdupr:4,785followers (in top 10 site referrers) +65% increase +54% increase FoureSquare:165 friends Google Plus: 675 friends Youiube;9,894views Pinterest: 55 followers added 2K views in fY 11.12 (in top 15 site referrers) Email Marketing The Bureau is sending a monthly email newsletter to subscribers via ExactTarget, a top email service provider. The email database has increased 57% to 15,740 year over year. New email templates were created this year to mirror the new website design. 0 WIN Pd1M oJAtlddtfs Paekage EIOT a11W WI rates for OC W.ftn, plus free am. to ahJ from Ise raa'a Rad and RMSh Gnel South Nast elaea The WyMMm Orarye Carry Dxkape trid1 vdIa, to$OYIh Coat Readores RM'e 0AWrW't, &WO. WIT *Vo and a- adxse meal ae SINN TnmTot RtttdugN. eaerpMa's lar{eR V, moa MutoN man p rtpN ora le Costa M.. VI.V Mry sear cat Hexa It snare Va nMd pas to snap. NOME l ABOI/T US I PRESS ROOM I WWAIJ US I SR MAP I GRW PS & MEETINGS 11111 uanmvIIEIIE 1'.o 111ITC3 ec Plkl . ns uneY li4lEVR=o. W IIE VI .1.nA I1Eel re 9341E � lFl e5] 553 SI I> 03111 ]i4 a555 .II,1 1111-11 91HIN die Bureau made great strides in getting regional and national medlh Cov?eagMTfY t, the -Mg McNally/USA TODAY "Best of the Road" Competition in summer tom The Bureau-egbh"tie S 1jfA' tf� e" Ya M85a and was able to get them considered as a finalist for the "Best in Food" category. Judges came to tfid tit and received a food tour, along with a City Council Proclamation making it "Best of the Road Day" in Costa Mesa. While Costa Mesa was not the winner in its category, the city received significant national media coverage In a variety of articles and social media posts from Rand McNally and USATODAY. Costa Mesa is featured in the Rand McNally GPS system as a finalist city, and also featured in an eBook produced by Rand McNally. COSTA MESA BE..§T IN.. FOOD FINALIST BEST' �\ or THE RWAD Other features and spotlights on the city Include: GoCalifornia.com Travel Spotlight - Costa Mesa/Newport Beach (http://www.go-california.com/costa-mesa-newport-beach/) Trip Advisor home page destination spotlight Alaska Airlines - October zoic featured OC hot spot Sunset Magazine - February 2012 spotlight May 2012 issue of SWA Spirit mag (Costa Mesa as 1 of 5 top OC adventures) In Costa Mesa Restaurant Week The Bureau created the first-ever Costa Mesa Restaurant Week In 2o11. The event was created to highlight Costa Mesa as a culinary destination, with 28 top restaurants participating In the event. The kickoff party was thrown by celebrity chef Charlie Palmer at his restaurant In South Coast Plaza. CMRW 2011 participating restaurants reported sales growth of 5-10% for the week. Over 28,000 visitors came to CostaMesaRestaurantWeek.org website in a 2 -month period. The Bureau is planning this to be an annual city event. 18 COSTA MESA PISTAURANT WE[K August 19-26, 2011 S'o '.,ej by COsw Mesa Enjoy special prix fixe lunch and dinner menu offers at Costa Mesa's top restaurants! For more information. visit www.CostaMesaPestaurantWeek.org 0 SCAN HERE with your smartphone app Brand Development Costa Mesa will expand and promote the brand of Costa Mesa, the City of the Arts'. Targeting a niche market of business and: leisure overnight visitors in feeder markets, this campaign will focus on the city as a fashion, culinary and arts destination, Integrating the "Art of OC Culture." This branding is aimed at positioning Costa Mesa as IBL arts and leisure destination in Orange County. As part of the comprehensive marketing and brand campaign, Costa Mesa will introduce a new logo, refreshed graphics and new Imagery to match with the city's improved marketing and promotional agenda. Palm Springs Portland/Seattle Costa Mesa had Identified the following target markets for potential overnight leisure: High Disposable income (HH income of took+) 30-55+ years of age LGBT Short Flight and Drive Markets Trendsetter This Initial marketing and advertising campaign will Include print publications, online media, SEO, outreach as well as necessary supporting research, PR and collateral directed toward Costa Mesa's target markets. Print Publications: C Magazine Sunset Magazine Los Angeles Magazine Travel and Leisure Arizona Foothills Magazine 20 �V Outreach FacebooK Aos Launch Sweepstakes Local NPR Radio Billboards - Palm Springs, San Jose, Phoenix/Scottsdale Captivate Network - Video screen promotion Direct Mail Brochure with Hotel Offers Assets Photo shoot Research Collateral Expected Outcome The Bureau plans to assess the campaign's effectiveness by measuring the Increase In overnight weekend travel throughout the duration of the campaign and by continuously monitoring the brand awareness of Costa Mesa online and through research. VAI �Y Gosta Mesa ww�.:'i'raceiCostaMesa.com Experience world-chl%shopping er South Coast Plaza Enjoyaward-winning Broadway productions at Segersttom Center for the Arts m DayTrip Stat. Porte u Intersects low,taie" used 405, and State Routes 22, 73, and 91 Wass ogdm9 as a fico-,, In Costa Mara. For a Bea Orange Carry Co tcaleaap, Wityuur local Auto CWb brazh For dri.'v�9J eAan, go bAMcoMmaPs. (' �rv^� ����000 Mesa ®�� l� SfGER3iROlA C EMEREORTNEMt; 1 9 14./S6.A SOVi1t COASTI�IA]ZA (i BYBEIHFHANEN r PHOTOGRAPHS BY LORI ANDENSON "�" ST s he small agdwltuml tuts at Fairview Rosd'sinter �12® p ns 3�3 �� a P1 coon sWth inter¢tate 405 hearkenshaok to costa d iw Mesa§ Past as a sernisusal fanninE conuumdy..Lima beans that belonged' Asnuaii� r -I OO ENRBaotNrot erne grew on nearby acreage to the family ofthe famak rnm,4 Henry SegerstroM Ila used :JN FNR uR o If that land todowlop south Onast Place, an upscale shopping A deatmaUon,and the newly mmm�cJ Segemlmm Centerfor the Arta.Cbserto thecwsq sacmt castside estabBshments y Ofuh ST pO" , � are worth dis<rwednEand merit Wsits on their can A f ]% 97H `Sp,� p1" i 33 ,e.+ l 8, q r n j n 1—/" 1 I Slartyarr TO rm, momingat n 7huf9k County Fair. Plums Caf£Olor Pacific .lC i `a 7hafak Wedreulay 5Nmth.st-inspired fare r'srr+�xx e' ' vov9h5wda Au uchastheoreagnRai1ddo lo ftLoclulraxn. breakfastofpmSaks., eggs, and bacon. 369 F. lith Shect.(949) 7T-PLUM)1586); phnnseofemm. Crab lunch at Bat chow (), a Ury, hip eatery thatle connected to The Ucaet foshton boutique and feature. Miclou. New 'y American<ulsine at decent prices. 1802 Newport eoukvard (4 k 5 (enter on l&h Strnf) (949)650- CHOW(2469)," nli raamnt i = Dina undergmlyd at to Cave©, a dimly lit. retro cwt steaUmme that§ been a nelgltbalmel tradition shire 1962. 1695 Wire Awnue.(949)646-1914; laMwrestmum"can S�_ 0 S,mass Floor Oe 9©' for s diWnie �v/�� y sdecdondjawd r ' .� � iJ b sulfite (949)es,and home Sdtel4 $ enuld"nlshl"Mtk96.i11h5M¢q ry0'..,toq Jianrdelysus.mnr. 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This makes the beaehe, all the more aWa b, Larrtnrorx ma,a boon as as Mee 20 deg,,e Meathe, to be perfaa,iy Warm for awi-1.,W.nd r6"TWog. 'In.lan,[ ltbgre.W l.Ihe kmaarI baa, In, 1. los Ary: , HI,lk.1. xM lives IV1m Angles.l Rt nems IMude off the Peking Wdl Raters A ate Coo, I it Ay We johl Iho.,lhI, T1.1 ha.,no , the intersatkn with Temettal Goyw Foal Afadoa Be, kcatN inehgotb hU,im del Pryand of nn Lot A Bele, he, Beach," @ a Inw 0e of Los Angeles veer itee Thea FdapwaM),xu enpya laking he, 3 }ealoM son to ph, there. - It hal no a wde't .., but bas a playgrouM on the be eh, and pnMng L'le.iful a,d easy; ahesays. Askk fmm yoking a t the ben 6exMs, 27 150 At -e: Thenal d 6, a,l Ranke and Hanry S,e,el,nm Contt,1141, 14 O-ge County ball- a'Phl, kafp!pe organ. 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Trad+LL-su tr,T We 31 ATTACHMENT 2 COSTA MESA CONFERENCE AND VISITOR BUREAU FINANCIAL STATEMENTS For the years ended June 30, 2011 and June 30, 2010 319 CONTENTS Independent auditors' report Page No. Statements of assets, liabilities and net assets — cash basis 2 Statements of support, revenues and expenses — cash basis 3 Notes to financial statements — cash basis 33 Geller Mitchell R Geller, CP.A, EPertl�ener Steven D. Eperthener, cP.A Wi iun L. McConnell, cp.a 3McConnell LLP c�rE'� " ) DOW PtiblicArronntmisnndCoustdwas � INDEPENDENT AUDITORS' REPORT To the Board of Directors of Costa Mesa Conference and Visitor Bureau We have audited the accompanying statement of assets, liabilities, and net assets — cash basis of Costa Mesa Conference and Visitor Bureau (a nonprofit organization) as of June 30, 2011, and the related statements of support, revenue, and expenses — cash basis for the year then ended. These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Costa Mesa Conference and Visitor Bureau as of June 30, 2010 were audited by other auditors whose opinion dated May 4, 2011, on those statements was qualified because of a departure from generally accepted account principles described in the third paragraph. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in note 1, these financial statements were prepared on the cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities, and net assets of Costa Mesa Conference and Visitor Bureau as of June 30, 2011, and its support, revenue and expenses for the year then ended, on the basis of accounting described in note 1. Certified Public Accountants Long Beach, CA April 25, 2012 3y (562) 594.5866 • (877) 310.1040 • fm (562) 594.7944 •3626 East Pacific Coast HghMy • 2nd Floor a Long Beach, Cilifomia 90804 COSTA MESA CONFERENCE AND VISITOR BUREAU STATEMENTS OF ASSETS, LIABILITIES AND NET ASSETS - CASH BASIS June 30, 2011 and June 30, 2010 Cash Total assets Unrestricted Net Assets ASSETS NET ASSETS 6/30/2011 6/30/2010 $ 985,314 $ 333,373 $ 985,314 $ 333,373 $ 985,314 $ 333,373 $ 985,314 $ 333,373 See accompanying notes to financial statements 3S COSTA MESA CONFERENCE AND VISITOR BUREAU STATEMENTS OF SUPPORT, REVENUES AND EXPENSES - CASH BASIS For the years ended June 30, 2011 and 2010 UNRESTRICTED NET ASSETS Unrestricted revenues Business improvement area assessment Special promotion income Interest income Other income Total unrestricted revenues Expenses Hotel and special promotions Marketing Salaries and Benefits General and administrative Total expenses Increase in unrestricted net assets NET ASSETS AT BEGINNING OF THE YEAR Net assets at end of year 6/30/2011 6/30/2010 $ 1,496,540 $ 1,149,347 - 3,335 2,879 2,611 551 - 1,499,970 1,155,293 102,175 225,942 319,848 59,7 260,696 230,600 165,310 141,044 848,029 1,057,299 651,941 97,994 333,373 235,379 $ 985,314 $ 333,373 See accompanying notes to financial statements 36 COSTA MESA CONFERENCE AND VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS - CASH BASIS June 30, 2011 and June 30, 2010 1. Nature of activities and Significant Accounting Policies Nature of activities The Costa Mesa Conference and Visitor Bureau (the Bureau) is a California non-profit corporation formed in 1995 to market the city of Costa Mesa as a leisure and group / meeting travel destination. The vision of the Bureau is to be the engaged destination -marketing leader by supporting and selling the city of Costa Mesa's distinct visitor brand experiences and advocating community tourism benefits. The Bureau's mission is to enhance and promote the city of Costa Mesa's brand, experience, further increasing visitor spending for industry and community economic viability, sustainability and quality of life. The Bureau is comprised of the ten member hotels within the Business Improvement Area (BIA) of Costa Mesa. The member hotels are Costa Mesa Marriott, Hilton Costa Mesa, Holiday Inn Express Hotel & Suites, The Hotel Hanford, Residence Inn by Marriott, Wyndham Orange County, Ayres Hotel & Suites, The Westin South Coast Plaza, Ramada Inn and Suites Costa Mesa / Newport Beach, and Best Western Plus Newport Mesa Inn. Basis of accounting The Bureau's policy is to prepare its financial statements on the basis of cash receipts and disbursements which is a comprehensive basis of accounting other than generally accepted accounting principles. Consequently, revenues are recognized when received rather than when earned, and expenses are recognized when disbursed rather than when the obligation is incurred. Tax status The Bureau is exempt from taxation under Internal Revenue Code Section 501(c)(6) on income related to its tax exempt purpose. The Bureau had no unrelated business income, as defined by the Internal Revenue Code, for the fiscal years ended June 30, 2011 and June 30, 2010. Accordingly, no tax provision has been provided for in the accompanying financial statements. 37 COSTA MESA CONFERENCE AND VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS - CASH BASIS (continued) June 30, 2011 and June 30, 2010 1. Nature of activities and Significant Accounting Policies (continued) Revenue On behalf of the City of Costa Mesa the Bureau's ten member hotels collect a Business Improvement Area (BIA) levy on the sale of overnight guest room stays. For the fiscal year ended June 30, 2011 the levy was two percent (2%) through October 31, 2010; effective November 1, 2010 the levy was increased to three percent (3%). The levy was two percent (2%) for the entire fiscal year ended June 30, 2010. The levy is transmitted by the hotels to the City and is remitted to the Bureau, net of a one percent handling fee, pursuant to a Professional Services Agreement entered into by and between the City and the Bureau. The above mentioned levy is 99.8% and 98.5% of the total revenue of the Bureau for fiscal years ended June 30, 2011 and June 30, 2010, respectively. The professional services agreement (PSA) with the City of Costa Mesa is renewed annually. The Bureau and the City of Costa Mesa have a good working relationship; consequently there is no concern that the PSA will not be renewed each year, indefinitely. Use of BIA Revenue California state law provides that BIA assessments are to be used for the purposes specified in the authorizing resolution that established the assessment. The City's resolution that established the assessment references the uses specified in the Bureau's annual report. 2. Cash Cash consists of demand deposits as of June 30, 2011 and June 30, 2010 at the following institutions: American Securities Bank Beach Business Bank National Bank Total 6/30/11 6/30/10 $759,528 $108,984 215,690 214,345 10.096 10.044 The Bureau maintains its cash in bank deposit accounts, which at various times during the fiscal years ended June 30, 2011 and June 30, 2010 exceeded federally insured limits. 3. Hotel promotions expense The Bureau allocates $50 per room to each member hotel for hotel specific marketing purposes. The allocation subsidizes hotel specific advertising and marketing efforts that also include the Bureau logo. Vendor invoices are either paid by the hotel or paid directly by the Bureau. Samples of the advertising / marketing material must be submitted showing the M1 COSTA MESA CONFERENCE AND VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS - CASH BASIS (continued) June 30, 2011 and June 30, 2010 3. Hotel promotions expense (continued) Breau logo for reimbursement. "ei-i promot?ons expeyse amounted to $ 02,17 nd $425,94 for fiscal years ended June 30, 901 30, 2 10, respectively. If the 6-6tels do not use all of their allocated unds the fundsYeve ack to the Bureau. Beginning in fiscal year 2012 the amount allocated per room will be increased to $150 per room. It is the opinion of the Bureau that reimbursing the hotels for advertising costs provides a public benefit to the City of Costa Mesa by promoting tourism, increasing retail sales, etc. 4. Marketing expenses The Bureau incurs marketing expenses related to its mission of promoting the City of Costa Mesa as a tourist destination. For the fiscal ars-ended June 30, 2011 and June 30, 2010, marketing expenses totaled $319,848 and 471,8 , respectively. Marketing expenses include a new website for the Bureau which went live in January 2012, community sponsorships, brochures, print advertising and various promotions. All of these endeavors promote tourism in the City of Costa Mesa. 5. Commitments and Contingencies The Bureau entered into a lease for office space effective July 15, 2010. The lease is for five (5) years ending July 31, 2015. There is an option to renew the lease for an additional five (5) years at the end of the lease period. Total rent expense for fiscal years ending June 30, 2011 and June 30, 2010 amounted to $32,145 and $ 0, respectively. Future minimum lease obligations as of June 30, 2011 consist of the following: Fiscal year ended June 30, 2012 $32,076 June 30, 2013 $33,036 June 30, 2014 $34,047 June 30, 2015 $35,068 June 30, 2016 $ 2,969 6. Employee Benefit Plan The Bureau sponsors a defined contribution salary deferral plan (401(k) plan) covering all employees. During the fiscal years ended June 30, 2011 and June 30, 2010 no Bureau contributions were made. Plan expenses paid by the Bureau during fiscal years ended June 30, 2011 and June 30, 2010 amounted to $600 for each year. 39 COSTA MESA CONFERENCE AND VISITOR BUREAU NOTES TO FINANCIAL STATEMENTS - CASH BASIS (continued) June 30, 2011 and June 30, 2010 7. Subsequent Events Management has evaluated subsequent events through April 25, 2012, the date that the financial statements were available to be issued. The following subsequent events have been identified for disclosure in these financial statements. As mentioned in note 3, effective July 1, 2011 the amount allocated to the member hotels will be increased from $50 per room to $150 per room, for marketing / advertising expenses. The Bureau has agreed to reimburse the city a total of $164,000 during the year ended June 30, 2012 for expenses paid for swag, website, etc. Beginning in April 2012 the board of directors has agreed to match 401(k) contributions dollar for dollar up to 3% of the eligible employee's salary. V ATTACHMENT 3 RESOLUTION NO 12. -xx A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, DECLARING ITS INTENTION TO LEVY AN ANNUAL ASSESSMENT FOR FISCAL YEAR 2012-2013 FOR A BUSINESS IMPROVEMENT AREA COVERING CERTAIN COSTA MESA HOTELS AND MOTELS AND SETTING THE TIME AND PLACE FOR A PUBLIC HEARING ON PROPOSAL, THE CITY COUNCIL OF THE CITY OF COSTA MESA DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, the California Legislature in adopting the Parking and Business Improvement Area Law of 1989 (Streets & Highways Code § 36500 et. seq.) authorized cities to levy assessments on businesses in order to promote economic revitalization and tourism, to create jobs, attract new businesses, and prevent erosion of business districts; and WHEREAS, on July 5, 1995, by Ordinance No. 95-9, the City Council adopted a business improvement area, commonly known as the Costa Mesa Tourism & Promotion Business Improvement Area, the purpose of which is to promote tourism to the City and to fund programs and activities that benefit the hotel and motel businesses within the City of Costa Mesa; and WHEREAS, the City Council appointed the general managers of the ten hotels subject to the assessment area, to serve as the advisory board as required by California Streets and Highways Code Section 36530; and WHEREAS, said advisory board is known as the Costa Mesa Conference and Visitor Bureau (the "CMCVB"); and WHEREAS, the City Council has voted to continue the special assessment for the BIA each year since its inception, and it has been levied upon the ten hotel and motel yi businesses listed on Exhibit A, attached hereto and incorporated herein by this reference; and WHEREAS, in January 2000, the City Council approved an increase in the assessment, raising the assessment from one percent (1%) to two percent (2%). The two percent (2%) assessment is based on the sale of overnight room stays; and WHEREAS, in November 2010, the City Council approved an increase in the assessment, raising the assessment from two percent (2%) to three percent (3%). The three percent (3%) assessment is based on the sale of overnight room stays; and WHEREAS, this Resolution of Intention will commence proceedings under the Parking and Business Improvement Area Law of 1989 (Streets & Highways Code § 36500 et seq.) to levy the annual assessment of the Costa Mesa Tourism & Promotion Council Business Improvement Area for the 2012-2013 fiscal year; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Costa Mesa as follows: Section 1. Assessment. An annual assessment for the Costa Mesa Tourism & Promotion Council Business Improvement Area is proposed to be levied pursuant to Streets & Highways Code § 36500 et seq. The proposed boundaries of the territory are the ten motels and hotels listed in Exhibit A, attached hereto and incorporated herein by this reference. The proposed amount of the annual assessment is three percent (3%). The three percent (3%) assessment is based on the sale of overnight room stays. New hotel and motel businesses commenced after the effective date of the ordinance levying the assessment will be exempt from the levy of assessment, pursuant to Streets & Highways Code § 36531 and § 36535. FAU Section 2. Annual Report. An annual report on the Business Improvement Area has been prepared by the Costa Mesa Conference & Visitor Bureau, acting as the advisory board as required by Streets & Highways Code § 36533 and § 36534. Said report is on file in the City Clerk's Office. Section 3. Types of Activities To Be Funded. The proposed type or types of activities to be funded by and through the annual levy of assessments on businesses within the Costa Mesa Tourism & Promotion Council Business Improvement Area are specified in the referenced annual report. Section 4. Method and Basis of Levv. The proposed method and basis of levying the assessment to allow each business owner to estimate the amount of the assessment to be levied against his or her business is set forth in the Costa Mesa Conference & Visitor Bureau's annual report relative to the Business Improvement Area. Section 5. Time and Place of Public Hearing. The time and place of the public hearing on the business improvement area and the annual levy of assessments shall be at 7:00 p.m., June 5, 2012, at the Costa Mesa City Hall, City Council Chambers, 77 Fair Drive, Costa Mesa, California. At the public hearing set forth above, the testimony of all interested persons for or against the annual levy of assessment for the business improvement area, the extent of the area, or the furnishing of specific types of improvements or activities will be heard by the City Council. Section 6. Protests. The following rules shall apply to all protests: (a) A protest may be made orally or in writing by any interested person. Any protest pertaining to the regularity or sufficiency of the proceedings shall be in writing and shall clearly set forth the irregularity or defect to which the objection is made. y3 (b) Every written protest shall be filed with the City Clerk's office, Costa Mesa City Hall, Room 101, 77 Fair Drive, Post Office Box 1200, Costa Mesa, California 92626-1200, at or before the time fixed for the public hearing as set forth above. (c) The City Council may waive any irregularity in the form or content of any written protest, and at the public hearing, may correct minor defects in the proceedings. (d) If written protests are received from the owners of businesses in the proposed business improvement area which will pay fifty percent (50%) or more of the assessments to be levied and protests are not withdrawn so as to reduce the protests to less than the fifty percent (50%), no further proceedings on the proposal to continue the business improvement area assessment, as specified by this resolution of intention, shall be taken by the City Council for a period of one year from the date of the filing of a majority protest. BE IT FURTHER RESOLVED THAT the City Council of the City of Costa Mesa, California, does hereby adopt the annual report by the Costa Mesa Conference & Visitor Bureau acting as the advisory board on the business improvement area (referenced report on file in the City Clerk's Office), and this Resolution of Intention as set forth herein, and Exhibit "A" which is attached hereto and incorporated by this reference. PASSED, APPROVED, AND ADOPTED this 15`h day of May, 2011. Eric Bever, Mayor yy ATTEST: Christine Cordon, Acting Deputy City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF COSTA MESA ) APPROVED AS TO FORM: Tom Duarte, City Attorney I, CHRISTINE CORDON, Acting Deputy City Clerk of the City of Costa Mesa, DO HEREBY CERTIFY that the above and foregoing is the original of Resolution No. 12 - XX and was duly passed and adopted by the City Council of the City of Costa Mesa at a regular meeting held on the 15thth day of May, 2012, by the following roll call vote, to wit: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the City of Costa Mesa this _ day of , 2011. (SEAL) CHRISTINE CORDON, ACTING DEPUTY CITY CLERK y� The Business Improvement Area ("BIA") benefit zone encompasses the entire City of Costa Mesa boundaries. It is anticipated that the entire City, including businesses and residents, will benefit from increased revenues generated by the activities financed by the BIA assessment. The following businesses will be included in the BIA that is established pursuant to Streets & Highways Code § 36500 et seq., the businesses commonly known as: Ayres Country Inn & Suites Property Address: 325 and 345 Bristol Street, Costa Mesa Business Owner: Newport Country Inn & Suites, Inc. 355 Bristol Street, Suite A Costa Mesa, CA 92626 Property Owner: Newport Country Inn & Suites, Inc. 355 Bristol Street, Suite A Costa Mesa, CA 92626 Best Western Newport Mesa Inn Property Address: 2642 Newport Boulevard, Costa Mesa Business Owner: James Hsuen Shang -Pu Lee 2642 Newport Boulevard, Costa Mesa, CA 92627 Property Owner: James Hsuen Shang -Pu Lee 2642 Newport Boulevard, Costa Mesa, CA 92627 Hilton Orange County/Costa Mesa Property Address: 3050 Bristol Street, Costa Mesa Business Owner: Ashford Hospitality Trust 14185 Dallas Parkway, Suite 1100 Dallas, TX 75254 yG Property Owner: Remington Lodging & Hospitality LP 14185 Dallas Parkway Suite 1100 Dallas, Texas 75254 Hotel Hanford Property Address: 3131 Bristol Street, Costa Mesa Business Owner: Hanford Hotels 4 Corporate Drive, Suite 102 Newport Beach, CA 92660 Property Owner: Hanford Hotels 4 Corporate Drive, Suite 102 Newport Beach, CA 92660 Holiday Inn Express Hotel and Suites, Costa Mesa Property Address: 2070 Newport Blvd., Costa Mesa Business Owner: Property Owner: Costa Mesa Marriott Narendra B. Patel 2070 Newport Blvd. Costa Mesa, CA 92667 Narendra B. Patel 2070 Newport Blvd. Costa Mesa, CA 92667 Property Address: 500 Anton Boulevard, Costa Mesa Business Owner: Property Owner: Marriott International 10400 Fernwood Rd. Bethesda, MD 20817 Host Hotels & Resorts 6903 Rockledge Dr. Suite 1500 Bethesda, MD 20817 y7 Ramada Inn Property Address: 1680 Superior Ave., Costa Mesa Business Owner: B.D. Inns Inc./Ramada Ltd. 1680 Superior Ave. Costa Mesa, CA 92627 Property Owner: B.D. Inns Inc./Ramada Ltd. 1680 Superior Ave. Costa Mesa, CA 92627 Residence Inn, Costa Mesa Property Address: 881 Baker Street, Costa Mesa Business Owner: Marriott International 10400 Fernwood Rd. Bethesda, MD 20817 Property Owner: ING Clarion Partners 2650 Cedar Springs Road Suite 850 Dallas, TX 75201-1491 The Westin South Coast Plaza Hotel Property Address: 686 Anton Boulevard, Costa Mesa Business Owner: Host Hotels & Resorts 6903 Rockledge Dr., Suite 1500 Bethesda, JD 20817 Property Owner: CJ Segerstrom & Sons c/o South Coast Plaza 686 Anton Boulevard Costa Mesa, CA 92626 70 Wyndham Hotel Property Address: 3350 Avenue of the Arts, Costa Mesa Business Owner: Rosanna Inc. 3350 Avenue of the Arts Costa Mesa, CA 92627 Property Owner: Rosanna Inc. 3350 Avenue of the Arts Costa Mesa, CA 92627 y9 EXHIBIT B The BIA assessment will be used to fund the Costa Mesa Conference & Visitor Bureau (CMCVB). The CMCVB will fund activities to promote tourism in Costa Mesa and will sponsor related tourist events that benefit the hotel and motel businesses within the City. The specific improvements and activities to be funded by this assessment are outlined in the CMCVB's 2011-2012 Annual Report. Revenue A three percent (3%) levy will be assessed against each of the ten hotels listed in Exhibit A, based on the net revenue from the sale of overnight room stays. Business owners shall pay the assessment to the Costa Mesa City Finance Department on a monthly basis. A penalty and interest shall be assessed on late payments. Note: New hotel and motel businesses commenced after the effective date of this Resolution will be exempt from the levy of assessment. va